Market Gains Broadly; Dow Index Rises 19.54 to Hit Record 1,304.88

NEW YORK —  Responding to falling interest rates, signs of a weakening dollar and a perception that Congress may get around to doing something about the federal deficit, the Dow Jones industrial average Monday closed above the elusive level of 1,300 for the first time.

Continuing a rally that has added 60 points to the closely watched index since May 1, the Dow gained 19.54 points to close at 1,304.88. The index’s previous record was 1,299.36, set March 1.

Monday’s rally was exceptionally broad and occurred on strong trading volume of 146.25 million shares. Three stocks gained in price for every one that fell on the New York Stock Exchange.

The NYSE composite index of 1,500 stocks, which has been setting records for several days, gained 1.24 from Friday to close at 109.72, another record high. The Wilshire index of 5,000 equities closed at 1,953.073, a gain of 21.992.

The Big Board’s industrial, utility and finance indexes also set records, as did the American Stock Exchange market-value index, which closed at 232.77, up 2.01 points.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,959, compared to 2,567 on Friday.

Cut in Prime Rate

The most immediate spur for stock traders came after Friday’s market close: the reduction by the Federal Reserve Board of the discount rate to 7.5% from 8%. The rate is what the Fed charges for loans to banks and thrift institutions. That move not only inspired several major banks to cut their prime rates to 10% from 10 1/2% but added to speculation that the Fed will move to ease credit further when its Federal Open Market Committee meets today. Any such moves would be aimed at stimulating the economy, which for several months has been showing signs of stagnating.

Stock market analysts and strategists nevertheless were divided on the significance of Monday’s rally.

“I think we’re near the end of the move rather than the beginning,” said Michael Metz, technical analyst for Oppenheimer & Co., noting that the market has been moving consistently up for several weeks.

As an index heavily weighted toward manufacturing companies, a sector occupying an ever-shrinking share of the national economy, “more and more, the Dow is not heavily representative of the market,” Metz added.

Still, major blue-chip issues were reacting positively to specific economic indicators. “You have lower interest rates, which means more car sales, so General Motors is up,” said William LeFevre, a technical analyst for Purcell, Graham & Co. “The dollar is beginning to weaken, so companies with a lot of sales overseas were up: Du Pont, Kodak and 3M, for example.”

‘Psychological’ Barrier

General Motors stock was up 1 1/2 at 70 3/8, Du Pont was up 1 at 59 3/4, Eastman Kodak was up 1 1/8 at 43 1/8 and Minnesota Mining & Manufacturing was up 1 3/8 at 78.

The Dow had moved above 1,300 several times since March 1 but always pulled back before the market closed. Although most analysts minimized that level’s importance as a “psychological” barrier, LeFevre noted that the stock market tends to stall when the index reaches round numbers because institutional investors often order their brokers to take profits by selling at those points.

“We had to wade through a lot of that for 2 1/2 months,” he said. “Now apparently that’s all behind us.”

In the bond market, prices soared by as much as $10 for every $1,000 in face value. But prices ended below the day’s highs in advance of today’s scheduled report on first-quarter growth in the nation’s gross national product.

The federal funds rate, the interest on overnight loans between banks, traded at 7.75%, unchanged from late Friday. Yields on short-term Treasury securities fell dramatically in Monday’s auctions, hitting their lowest levels in almost five years.

In the secondary market for Treasury bonds, prices of short-term governments rose 1/8 point, intermediate maturities rose by between 2/32 point and 5/8 point and long-term issues were up as much as a full point, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

Yields on three-month Treasury bills were down 3 basis points to 7.25%. Six-month bills fell 4 basis points to 7.41%, and one-year bills were off 5 basis points at 7.62%. A basis point is one-hundredth of a percentage point.

In corporate trading, industrials rose 3/4 point and utilities rose 7/8 point in moderate trading. Among tax-exempt municipal bonds, general obligations rose 1/2 point and revenue bonds were up 3/8 point, Salomon Bros. said.

Yields on 30-year Treasury bonds fell to 10.82% from 10.93% late Friday.

HISTORIC DATES FOR THE DOW JONES INDUSTRIAL AVERAGE:

1896 -- first appears in the Wall Street Journal.

Jan. 12, 1906 -- closes above 100 for the first time, at 100.25.

Sept. 3, 1929 -- reaches its closing peak for the bull market of the 1920s, at 381.17, less than two months before the Great Crash.

1. Oct. 28, 1929 -- records biggest drop ever, 38.33 points, or nearly 13% of the average’s value, closing at 260.64.

2. July 8, 1932 -- closes at its Depression low of 41.22, having fallen 89% in less than three years.

3. March 12, 1956 -- closes above 500 for the first time, at 500.24.

4. Jan. 18, 1966 -- reaches 1,000 for the first time in mid-session but drops back to close at 994.20.

5. Nov. 14, 1972 -- closes above 1,000 for the first time, at 1,003.16.

Jan. 11, 1973 -- peaks at 1,051.70.

6. Dec. 6, 1974 -- closes at a 12-year low of 577.60, ending the worst bear market since the ‘30s.

April 27, 1981 -- closes at an eight-year high of 1,024.05.

Aug. 12, 1982 -- closes at a two-year low of 776.92, just before the start of a historic rally.

Aug. 17, 1982 -- rises 38.81 points, to 831.24, in its then largest one-day gain.

Oct. 25, 1982 -- falls 36.33 for its second-largest drop ever, but, unlike the crash of 1929, it represents only 3.5% of the average’s value.

Nov. 3, 1982 -- soars 43.41 points, its biggest gain ever, to a new closing high of 1,065.49.

Feb. 24, 1983 -- soars 24.87 points to close at 1,121.81, its first finish above 1,100.

7. April 26, 1983 -- breaks the 1,200 level for the first time, rising 22.25 points to close at 1,209.46.

o Oct. 10, 1983 -- rises 12.50 points to a record 1,284.65, the third new high in three trading sessions.

Jan. 29, 1985 -- gains 14.79 points to a record 1,292.62; advances outnumber declines for a record 17th straight session on the NYSE.

March 1, 1985 -- increases 15.35 points to a record 1,299.36.

8. May 20, 1985 -- jumps 19.54 points to finish above 1,300 for the first time, closing at 1,304.88.